Despite three “51% attacks” in a month, Ethereum Classic’s price has demonstrated strong resilience. Though down a bit for the past month, its persistence may indicate that security is not a top priority for investors rushing to join a bull run in the crypto market.
However, some warn that unless it improves its blockchain and makes it safer, additional attacks on Ethereum Classic could trigger a market sell-off and lead to a collapse of its digital asset.
For a blockchain network’s security, a “51% attack” is pretty much as bad as it gets. That’s when a single entity gains control of a majority of the network’s computing power, allowing it to siphon off extra units of the currency in what’s known as a double-spend.
So it would stand to reason that three successful 51% attacks in a month against the Ethereum Classic blockchain might dent investors’ confidence. But prices for the project’s native ETC token haven’t really taken a hit – a sign traders could be less concerned about security vulnerabilities than a quick profit in fast-moving cryptocurrency markets.
At press time, ethereum classic is trading at $5.06, down about 27% in the past 30 days at the same time bitcoin is off by 15%.
Three 51% Attacks in a Month
For the Ethereum Classic blockchain, 51% attacks have been a threat for a long time. Unlike Ethereum, from which it was hard forked, the Ethereum Classic network is committed to the Proof-of-Work (PoW) consensus algorithm, which is also used by BItcoin. But for large networks like Bitcoin, a 51% attack is prohibitively expensive to do given the enormous amount of computational power required by PoW to successfully do it. Ethereum Classic’s hashrate is much smaller, making it far more vulnerable to 51% attacks.
By press time, the hashrate of Ethereum Classic stood at 1.668 terahash per second, while Bitcoin’s at 117.95 exashes per second, according to BitInfoCharts.
Ethereum Classic is the product of a hard fork after the Ethereum network split in different ways following an infamous hack in 2016. The PoW-based blockchain has been chasing after Ethereum, which now represents the No.2 cryptocurrency by market capitalization.
Ethereum is planning on changing its algorithm sometime next year. In a tweet thread Sept. 2, Ethereum founder Vitalik Buterin argued Ethereum’s planned Proof-of-Stake (PoS) algorithm gives it a “key fundamental” advantage over PoW.
“In PoW, on the other hand, a successful attacker can just attack over and over again, with no possible way to delete their hardware without deleting everyone else’s hardware.”
During the month of August, the Ethereum Classic network suffered not one but three 51% attacks: the first one took place on Aug. 1, the second on Aug. 6 and a third on Aug. 29.
NiceHash, a hashpower broker, acknowledged its platform may have facilitated the recent 51% attacks, in a blog post on Sept. 1, but it also concluded that such attacks cannot be prevented or mitigated in a “truly decentralized proof-of-work solution.”
“The only thing one can do is make the price of an attack higher than the attacker reward,” the post added.
The Ethereum Classic network also suffered a 51% attack in early 2019, which led crypto exchange Coinbase to halt all ETC transactions, withdrawals and deposits at the time.
James Wo, founder of ETC Labs, the leading organization supporting the Ethereum Classic network, told CoinDesk via a spokesperson that his team has been trying to enhance the network’s security in the past year, including expanding the network’s core development team, and partnering with companies such as Chainlink, Swarm and Bloq.
The company announced two new hires on Sept. 3 to ETC’s core development team.
“These developments and partnerships are working to quickly propel the advancement of ETC and ensure a bright future for the network,” Wo said, who added that ETC’s price has held “strong” even with the recent 51% attacks.
Indeed, the attacks have not had any significant impact on its prices, which prompted a question: why would anyone put money in a token when its security is not guaranteed?